China's JD.com makes push to lure European luxury brands

MADRID (Reuters) - Chinese e-commerce company JD.com made a pitch on Wednesday to attract more European luxury brands to its site, saying it could offer faster delivery and better protection against fakes than bigger rival Alibaba Group Holding.

A sign of China's e-commerce company JD.com is seen at CES (Consumer Electronics Show) Asia 2016 in Shanghai, China, May 12, 2016. REUTERS/Aly Song/File Photo

China’s second-largest e-commerce business is planning an office in Milan, after opening its first in Europe in Paris in January. It is also teaming up with Spanish brands, international president Winston Cheng said in Madrid.

“We are looking for other venues as we expand,” he told journalists at the World Retail Congress. “We have one of the highest quality bases of consumers inside China, growing very rapidly.”

Both JD.com and Tmall are major sponsors of the congress, an annual gathering for executives, and both held competing lunch events as they made their pitches to brands.

In October, JD.com launched Toplife, a platform which aims to woo luxury buyers with same-day deliveries and premium services, including extra clean and secure warehouses with special air filters.

It rivals Luxury Pavilion, a similar portal launched in August which is backed by Alibaba’s Tmall platform and features products from fashion groups such as Burberry. Tmall launched a membership program for Pavilion users last week.

In its pitch to brands, Tmall puts a focus on the technology and customer data it can offer, such as a smart mirror it had on display in Madrid where users can try on different outfits.

“That is how we fundamentally differentiate ourselves from e-retailers. We are not a retailer. We are a platform to enable brands and retailers,” Tmall President Jet Jing told Reuters.

DIGITALISED MARKET

Jing said brands can get new ideas from China, citing the example of connecting customers in remote Chinese areas to online beauty advisers from cosmetic company Estee Lauder .

“It is the best testing bed for all the European brands and retailers to try out in this mobilized and digitalized market for a new way to run a business,” he said.

FILE PHOTO: A logo of JD.com is seen on a helmet of a delivery man in Beijing, China June 16, 2014. Picture taken June 16, 2014. REUTERS/Jason Lee/File Photo

JD.com puts the focus on its advantage over Alibaba of running all its own logistics, allowing it to promise same and next day delivery on more than 90 percent of orders, as well as its “zero tolerance” policy towards counterfeit goods.

“Fake goods is a big issue in China. Our focus on authenticity has led to our success,” Cheng said.

Chinese shoppers made up 32 percent of the worldwide luxury market in 2017, more than any other nationality, consultancy Bain & Co said, making it a crucial market for fashion brands.

Cheng said Toplife had already signed up 20 brands, including names from the Kering group such as Saint Laurent and Alexander McQueen.

He said they have been attracted by its offer of delivery within one or two hours by white-gloved employees in suits, with the tallest and best-looking chosen for the task, some of them former soldiers.

He noted growing Chinese demand for luxury products, with the Gucci brand getting 100,000 searches a day on its site and sales of premium Spanish ham up 700 percent last year.

While JD.com is focusing for now on southeast Asia for expansion outside of China, Cheng said the company could eventually make moves into Europe.

“There are a lot of offline players and even online players reaching out to us because of our scale and because of our willingness to partner,” he said, adding that any deal would have to be with “a very large retailer”.

“Europe seems to be a battleground between maybe the Chinese and Amazon,” he said, noting that the American giant had an advantage because of English being a global language.

“When we try to expand, particularly in Europe, we need to make sure we’re ready from these two aspects: language and culture.”